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In June 2019, Methode Electronics, Inc. (NYSE:MEI) released its most recent earnings announcement, which showed that the company gained from a strong tailwind, leading to a high double-digit earnings growth of 60%. Below, I've presented key growth figures on how market analysts view Methode Electronics's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Analysts' outlook for the upcoming year seems buoyant, with earnings climbing by a robust 38%. This growth seems to continue into the following year with rates arriving at double digit 56% compared to today’s earnings, and finally hitting US$175m by 2022.
Even though it’s useful to understand the growth rate year by year relative to today’s figure, it may be more insightful analyzing the rate at which the company is moving on average every year. The advantage of this approach is that it ignores near term flucuations and accounts for the overarching direction of Methode Electronics's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 17%. This means, we can anticipate Methode Electronics will grow its earnings by 17% every year for the next couple of years.
For Methode Electronics, there are three key aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is MEI worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether MEI is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of MEI? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.